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Novation

DEFINITION

Substituting one obligation for another by mutual obligation of all parties.

EXPLANATION

Novation refers to the replacement of an original contract with a new contract, or the modification/substitution of a particular provision in the original contract. Novation requires that there was acceptance by both parties in the original contract.

Performance, reformation, rescission, release, and novation are methods used to discharge a contract. Additionally, if the contract contains unlawful or impossible provisions, the court may hold the contract unenforceable and invalid.